Home Business Oil prices rise with U.S. crude inventories down a 5th straight week – MarketWatch

Oil prices rise with U.S. crude inventories down a 5th straight week – MarketWatch

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Oil futures rose Wednesday, with Brent prices trading above the key $75 mark, as U.S. crude supplies declined by nearly eight million barrels to mark their fifth weekly fall in a row.

The string of crude-oil supply draws shows the strength of the U.S. economy but at the same time, reveals the “vulnerabilities of our lack of production,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch.

U.S. crude inventories fell by 7.6 million barrels for the week ended June 18, according to a report Wednesday from the Energy Information Administration. That marked the fifth consecutive decline reported by the EIA.

On average, analysts polled by S&P Global Platts forecast a decline of 6.3 million barrels for crude stocks, while the American Petroleum Institute on Tuesday reported a 7.2 million-barrel decrease.

“We’re starting to see a supply squeeze,” and that’s “one of the reasons why we’re seeing the markets so strong,” said Flynn.

On it’s first full session as a front-month contract, West Texas Intermediate crude for August delivery
CL00,
+0.48%

CLQ21,
+0.48%

rose 70 cents, or 1%, to $73.55 a barrel on the New York Mercantile Exchange. August Brent crude
BRNQ21,
+0.59%

was up 81 cents, or 1.1%, at $75.62 a barrel on ICE Futures Europe.

September Brent
BRN00,
+0.65%

BRNU21,
+0.65%
,
the most actively traded contract, was up 80 cents, or 1.1%, at $74.88 a barrel.

Prices for Brent, based on the front months, were on track to climb back to their highest settlement since October 2018.

The EIA also reported that gasoline supplies fell by 2.9 million barrels, while distillate stockpiles rose by 1.8 million barrels for the week. The S&P Global Platts survey had forecast supply increases of 1.3 million barrels for gasoline and 1 million barrels for distillates.

On Nymex, July gasoline
RBN21,
+1.69%

tacked on 1.8% to $2.26 a gallon and July heating oil
HON21,
+0.65%

rose 1% to $2.17 a gallon. Prices on Tuesday for both contracts had settled at their highest since 2018.

The data showed a rebound in U.S. gasoline demand — “a sign that the U.S. economy is getting back to work and people are getting back behind the wheel,” said Flynn. “We expect to see that demand continue and we expect it will come back faster than the supply side.”

Crude stocks at the Cushing, Okla., storage hub, meanwhile, declined by 1.9 million barrels for the week, the EIA data showed. Total domestic petroleum production moved lower by 100,000 barrels to 11.1 million barrels per day.

“U.S. well production slipped last week at a time when normally it would be rising,” said Flynn. “We’re starting to see the impact of underinvestment in the U.S. shale patch or…better fiscal discipline from shale producers.”

“Whatever it is, we’re starting to see that the demand side is coming back a lot faster than the supply side, and that’s going to support prices in the near term period,” said Flynn.

Oil prices settled lower on Tuesday, pressured by reports that said the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, have discussed a further relaxation of crude production curbs beginning in August.

Rounding out action on Nymex, natural-gas futures rallied ahead of its EIA update on U.S. supplies due Thursday.

July natural gas
NGN21,
+2.55%

traded at $3.36 per million British thermal units, up 3.2%.

“Forecasts call for record temperatures across the western U.S. starting this weekend,” said Christin Redmond, commodity analyst at Schneider Electric, in a daily note. “However, below-normal temperatures in the South may somewhat temper the overall increase in gas demand from power generators.”

“Hotter-than-normal temperatures have been the norm in Mexico lately as well, which has pushed gas demand there higher, with U.S. pipeline exports trending near record highs the past couple of days” at more than 7 billion cubic feet per day, she said.

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